An insurance company looks at the records for millions of homeowners and conclude the prob-ability of fire in a year


An insurance company looks at the records for millions of homeowners and conclude the prob-ability of fire in a year is0.01for each house and the loss should a fire occur is$10,000. Thusthe expected loss from fire for each house is$100. Assume the fires are independent. The com-pany plans to sell fire insurance for$120 (which is the expected loss plus$20). If a house ownerpurchases the insurance and his****************/


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